Picking at metrics on bill-review time saved with a fixed-fee arrangement

A small item in a recent Corp. Exec. Board document opines that “Fixed fees save about 100 hours of scarce lawyer time a year because in-house counsel no longer need to review invoices. The annual renegotiation process takes around 6-8 hours of general counsel time.” By my quick calculation, since internal lawyer time costs around $200 an hour (See my post of April 3, 2005 with its estimate of $150 an hour.), the net saving would be approximately $16,000. But the basis for the purported savings of hours is murky.

Whence the 100-hour figure? The page refers to Coachmen Industries, which might be the source of this estimate, and the accompanying footnote simply says CEB “research.” Perhaps the author estimated that to review a normal, hourly-rate invoice takes about eight hours a month. If a single matter is under the arrangement, there is no way to reach the 100-hour savings mark. No one pores over bills with that might time and attention

To me, the negotiation figure for the general counsel is anybody’s guess and varies wildly. I think it also unrealistic to maintain that a fixed-fee arrangement entails no maintenance time during its term.